A US judge has ruled Volkswagen does have a case to answer in a California court over the company's diesel emissions cheating scandal.
A US judge has ruled Volkswagen does have a case to answer in a California court over the company’s diesel emissions cheating scandal.
The judge refused VW’s request to have an investor lawsuit tossed out. It had argued that German courts were the proper place for a hearing.
The investors – mostly US municipal pension funds – are suing for compensation of hundreds of millions of dollars.
They allege VW and its executives committed securities fraud by misleading them and improperly inflating the price of its shares by cheating on the emissions tests.
The shares slumped in value when that became public, falling 25 percent with VW’s market capitalisation down by $63 billion.
The plaintiffs had invested in VW through American Depositary Receipts (ADR), a form of equity ownership in a non-US company that represents the foreign shares of the company held on deposit by a bank in the company’s home country.
US District Judge Charles Breyer said in his ruling that “because the United States has an interest in protecting domestic investors against securities fraud” the lawsuits should go forward in a US court.
The judge also ruled that VW’s former Chief Executive Martin Winterkorn and VW brand head Herbert Diess must also defend the lawsuits brought personally against them.
VW in September 2015 admitted using sophisticated secret software in its cars to cheat exhaust emissions tests, with 11 millions vehicles worldwide affected.
The cheating allowed nearly 580,0000 of VW’s US diesel vehicles sold since 2009 to emit up to 40 times legally allowable pollution levels.
Volkswagen has agreed to spend as much as $17.5 billion in the United States to resolve claims from owners and federal and state regulators over polluting diesel vehicles.
Volkswagen must face legal charges in the US after losing a court battle to get the case re-located to Germany: https://t.co/KKZzajIuO9— Peter Campbell (@Petercampbell1) January 5, 2017